Question 1

If a long-term investment in an equity security gives the investor significant influence over the investee,the investment is classified as available-for-sale.

Accepted Answer

A) True 
 B)False

Question 2

On September 15,Nolan Company purchases 2,000 shares of Francis Company common stock for $30,000,including $500 of commissions and brokerage fees.This is Nolan's first and only purchase of this type of investment.On November 1,Nolan sold 500 shares of the Francis Company stock for $8,200.On December 31,the fair value of Francis Company common stock was $16 per share.The journal entry to record the sale of stock on November 1 is:

Accepted Answer

A) Debit Cash,$8,200; Credit Stock Investments - Francis Company,$7,375; Credit Unrealized Gain - Income,$825. 
B) Debit Cash,$8,200; Credit Stock Investments - Francis Company,$7,500; Credit Unrealized Gain - Income,$700. 
C) Debit Cash,$8,200; Credit Stock Investments - Francis Company,$7,375; Credit Gain on Sale of Stock Investments,$825. 
D) Debit Cash,$8,200; Credit Stock Investments - Francis Company,$7,500; Credit Gain on Sale of Stock Investments,$700. 
E) Debit Cash,$8,200; Credit Stock Investments - Francis Company,$8,200. 
A) Debit Cash,$8,200; Credit Stock Investments - Francis Company,$7,375; Credit Unrealized Gain - Income,$825. 
B) Debit Cash,$8,200; Credit Stock Investments - Francis Company,$7,500; Credit Unrealized Gain - Income,$700. 
C) Debit Cash,$8,200; Credit Stock Investments - Francis Company,$7,375; Credit Gain on Sale of Stock Investments,$825. 
D) Debit Cash,$8,200; Credit Stock Investments - Francis Company,$7,500; Credit Gain on Sale of Stock Investments,$700. 
E) Debit Cash,$8,200; Credit Stock Investments - Francis Company,$8,200.

Question 3

A company had net income of $2,660,000,net sales of $25,000,000,and average total assets of $8,000,000.Its return on total assets equals:

Accepted Answer

A) 3.01%. 
B) 10.64%. 
C) 32.00%. 
D) 33.25%. 
E) 300.75%. 
A) 3.01%. 
B) 10.64%. 
C) 32.00%. 
D) 33.25%. 
E) 300.75%.

Question 4

Short-term investments in held-to-maturity debt securities are accounted for using the ________.

Accepted Answer

cost metho

Question 5

Canberry Corporation had net income of $80,000,beginning total assets of $640,000 and ending total assets of $580,000.Its return on total assets is:

Accepted Answer

A) 13.1% 
B) 12.5% 
C) 13.8% 
D) 800% 
E) 725% 
A) 13.1% 
B) 12.5% 
C) 13.8% 
D) 800% 
E) 725%

Question 6

________ are debt securities that a company intends to actively manage and trade for a profit.

Accepted Answer

The answer of ________ are debt securities that a company...

Question 7

A company reported net income for Year 1 of $98,000 and $106,000 for Year 2.It also reported net sales of $835,000 in Year 1 and $918,000 in Year 2.The company's average total assets in Year 1 were $1,850,000 and $1,720,000 in Year 2.Calculate the company's profit margin,total asset turnover and return on total assets for Year 1 and Year 2.Comment on the results.

Accepted Answer

@#IMG-DLM& The company did not increase its profit

Question 8

Carpark Services began operations in 20X1 and maintains long-term investments in available-for-sale debt securities.The year-end cost and fair values for its portfolio of these investments follow.The year-end adjusting entry to record the unrealized gain/loss at December 31,20X2 is:

Accepted Answer

A) Debit Unrealized Gain - Equity $3,000; Credit Fair Value Adjustment - Available-for-Sale (LT)$3,000. 
B) Debit Fair Value Adjustment - Available-for-Sale (LT)$6,000; Credit Unrealized Loss - Equity $6,000. 
C) Debit Fair Value Adjustment - Available-for-Sale (LT)$3,000; Credit Unrealized Gain - Equity,$3,000. 
D) Debit Fair Value Adjustment - Available-for-Sale (LT)$3,000; Credit Unrealized Loss - Equity $3,000. 
E) Debit Fair Value Adjustment - Available-for-Sale (LT)$6,000; Credit Unrealized Gain - Equity $6,000. 
A) Debit Unrealized Gain - Equity $3,000; Credit Fair Value Adjustment - Available-for-Sale (LT)$3,000. 
B) Debit Fair Value Adjustment - Available-for-Sale (LT)$6,000; Credit Unrealized Loss - Equity $6,000. 
C) Debit Fair Value Adjustment - Available-for-Sale (LT)$3,000; Credit Unrealized Gain - Equity,$3,000. 
D) Debit Fair Value Adjustment - Available-for-Sale (LT)$3,000; Credit Unrealized Loss - Equity $3,000. 
E) Debit Fair Value Adjustment - Available-for-Sale (LT)$6,000; Credit Unrealized Gain - Equity $6,000.

Question 9

Investments in equity securities where the investor has a controlling influence are accounted for using the ________.

Accepted Answer

equity met

Question 10

What are the accounting basics for debt securities,including recording their acquisition,interest earned,and their disposal?

Accepted Answer

At acquisition,debt securities are recor

Question 11

Held-to-maturity securities are:

Accepted Answer

A) Always classified as Short-Term Investments. 
B) Always classified as Long-Term Investments. 
C) Debt securities that a company intends and is able to hold to maturity. 
D) Equity securities that a company intends and is able to hold to maturity. 
E) Equity securities where significant influence involved. 
A) Always classified as Short-Term Investments. 
B) Always classified as Long-Term Investments. 
C) Debt securities that a company intends and is able to hold to maturity. 
D) Equity securities that a company intends and is able to hold to maturity. 
E) Equity securities where significant influence involved.

Question 12

A company had net income of $45,000,net sales of $390,000,and average total assets of $450,000 for the current year.Calculate the company's profit margin,total asset turnover,and return on total assets.

Accepted Answer

The answer of A company had net income of $45,000,net...

Question 13

Hamasaki Company owns 30% of CDW Corp.stock.Hamasaki received $6,500 in cash dividends from its investment in CDW.The entry to record receipt of these dividends includes a debit to Cash for $6,500 and a credit to Equity Method Investments for $6,500.

Accepted Answer

A) True 
 B)False

Question 14

Discuss the reasons companies make investments.

Accepted Answer

Companies make investments for several r

Question 15

Investments in trading securities are accounted for using the equity method with consolidation.

Accepted Answer

A) True 
 B)False

Question 16

Long-term investments in available-for-sale securities are reported at their ________ on the balance sheet.

Accepted Answer

The answer of Long-term investments in available-for-sale securities are reported...

Question 17

On January 1,2017,Rickson Corporation purchased 7,500 shares of AutoTech as a long-term investment for a total of $235,000.The 7,500 shares represent 30% of the outstanding (25,000)shares of AutoTech.Prepare the journal entries for Rickson to record the following transactions and events:
 December 31, 2017: $\quad$AutoTech reported net income of $\$ 66,000$ for 2014 .
February 1, 2018: $\quad$$\quad$Sold 1,875 of the AutoTech shares for $\$ 34$ per share. In addition, 
$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\$ 1,350$ in fees and commissions were paid by Rickson on this sale.
November 1, 2018: $\quad$$\quad$Rickson received a $\$ 0.90$ per share cash dividend from AutoTech.
December 31, 2018: $\quad$$\quad$AutoTech reported net loss of $\$ 46,000$ for 2015 .

Accepted Answer

The answer of On January 1,2017,Rickson Corporation purchased 7,500 shares...

Question 18

Marjam Company owns 30,000 shares of MacKenzie Company's 100,000 outstanding shares of common stock.MacKenzie Company pays $25,000 in total cash dividends to its shareholders.Marjam's entry to record this transaction should include a:

Accepted Answer

A) Credit to Dividend Revenue for $7,500. 
B) Credit to Interest Revenue for $25,000. 
C) Credit to Equity Method Investments for $7,500. 
D) Credit to Equity Method Investments for $25,000. 
E) Credit to Dividend Revenue for $25,000. 
A) Credit to Dividend Revenue for $7,500. 
B) Credit to Interest Revenue for $25,000. 
C) Credit to Equity Method Investments for $7,500. 
D) Credit to Equity Method Investments for $25,000. 
E) Credit to Dividend Revenue for $25,000.

Question 19

Landmark Corp.buys $300,000 of Schroeter Company's 8%,5-year bonds at par value on September 1.Interest payments are made semiannually.All of the following regarding accounting for the securities are true except:

Accepted Answer

A) The debt securities should be recorded at cost,$300,000. 
B) The securities will have a maturity value of $300,000. 
C) The semiannual interest payment amount is $12,000. 
D) The semiannual interest payment amount is $24,000. 
E) Interest Revenue should be credited when an interest payment is received. 
A) The debt securities should be recorded at cost,$300,000. 
B) The securities will have a maturity value of $300,000. 
C) The semiannual interest payment amount is $12,000. 
D) The semiannual interest payment amount is $24,000. 
E) Interest Revenue should be credited when an interest payment is received.

Question 20

The cost method of accounting is used for long-term investments in equity securities with significant influence.

Accepted Answer

A) True 
 B)False

If a long-term investment in an equity security gives the investor significant influence over the investee,the investment is classified as available-for-sale.

A company had net income of $2,660,000,net sales of $25,000,000,and average total assets of $8,000,000.Its return on total assets equals:

Short-term investments in held-to-maturity debt securities are accounted for using the ________.

Canberry Corporation had net income of $80,000,beginning total assets of $640,000 and ending total assets of $580,000.Its return on total assets is:

________ are debt securities that a company intends to actively manage and trade for a profit.

Carpark Services began operations in 20X1 and maintains long-term investments in available-for-sale debt securities.The year-end cost and fair values for its portfolio of these investments follow.The year-end adjusting entry to record the unrealized gain/loss at December 31,20X2 is:

Investments in equity securities where the investor has a controlling influence are accounted for using the ________.

What are the accounting basics for debt securities,including recording their acquisition,interest earned,and their disposal?

Held-to-maturity securities are:

A company had net income of $45,000,net sales of $390,000,and average total assets of $450,000 for the current year.Calculate the company's profit margin,total asset turnover,and return on total assets.

Hamasaki Company owns 30% of CDW Corp.stock.Hamasaki received $6,500 in cash dividends from its investment in CDW.The entry to record receipt of these dividends includes a debit to Cash for $6,500 and a credit to Equity Method Investments for $6,500.

Discuss the reasons companies make investments.

Investments in trading securities are accounted for using the equity method with consolidation.

Long-term investments in available-for-sale securities are reported at their ________ on the balance sheet.

Marjam Company owns 30,000 shares of MacKenzie Company's 100,000 outstanding shares of common stock.MacKenzie Company pays $25,000 in total cash dividends to its shareholders.Marjam's entry to record this transaction should include a:

Landmark Corp.buys $300,000 of Schroeter Company's 8%,5-year bonds at par value on September 1.Interest payments are made semiannually.All of the following regarding accounting for the securities are true except:

The cost method of accounting is used for long-term investments in equity securities with significant influence.

Introducing Financial Statements

Financial Statements and the Accounting System

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash,fraud,and Internal Control

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

International Operations

Filters

Exam 15: Investments

If a long-term investment in an equity security gives the investor significant influence over the investee,the investment is classified as available-for-sale.

A company had net income of $2,660,000,net sales of $25,000,000,and average total assets of $8,000,000.Its return on total assets equals:

Short-term investments in held-to-maturity debt securities are accounted for using the ________.

Canberry Corporation had net income of $80,000,beginning total assets of $640,000 and ending total assets of $580,000.Its return on total assets is:

________ are debt securities that a company intends to actively manage and trade for a profit.

Carpark Services began operations in 20X1 and maintains long-term investments in available-for-sale debt securities.The year-end cost and fair values for its portfolio of these investments follow.The year-end adjusting entry to record the unrealized gain/loss at December 31,20X2 is:

Investments in equity securities where the investor has a controlling influence are accounted for using the ________.

What are the accounting basics for debt securities,including recording their acquisition,interest earned,and their disposal?

Held-to-maturity securities are:

A company had net income of $45,000,net sales of $390,000,and average total assets of $450,000 for the current year.Calculate the company's profit margin,total asset turnover,and return on total assets.

Hamasaki Company owns 30% of CDW Corp.stock.Hamasaki received $6,500 in cash dividends from its investment in CDW.The entry to record receipt of these dividends includes a debit to Cash for $6,500 and a credit to Equity Method Investments for $6,500.

Discuss the reasons companies make investments.

Investments in trading securities are accounted for using the equity method with consolidation.

Long-term investments in available-for-sale securities are reported at their ________ on the balance sheet.

Marjam Company owns 30,000 shares of MacKenzie Company's 100,000 outstanding shares of common stock.MacKenzie Company pays $25,000 in total cash dividends to its shareholders.Marjam's entry to record this transaction should include a:

Landmark Corp.buys $300,000 of Schroeter Company's 8%,5-year bonds at par value on September 1.Interest payments are made semiannually.All of the following regarding accounting for the securities are true except:

The cost method of accounting is used for long-term investments in equity securities with significant influence.

Introducing Financial Statements

Financial Statements and the Accounting System

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash,fraud,and Internal Control

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

International Operations

Filters